Could a Fed Rate Hike Help the Economy?

David Kelly of JPMorgan Funds makes the case that a slight bump in interest rates would set in motion a virtuous cycle of economic forces.

This transcript has been automatically generated and may not be 100% accurate.

I ... not only is he yours economy strong enough to handle a rate hike the economy could use to help ... says David Kelly is chief global strategist at jpmorganfunds idea that ... this is kind of a contrary view I hear a lot of people saying ... will some people saying if you raise rates rate now visits a fragile recovery you could de rail the ideas I think is very unfortunate people don't look under the hood and think about the transmission mechanisms ... by which it is a tax effective column ... because our research suggests that when you raise rates from the very low level you actually stimulate the economy ... the first rate hike taxes to make the comment then ... thereafter is some of the effects of the Duchy tighten up and economists who eventually ... rise to raising rates from a high level also the comic ... but it sure helps a cop out was that was to help in this from ... a few different things the big is the isthe pushes the interest income ... we estimate that a one percent increase in short-term interest rates ... will adds to interest income by about sixty five billion dollars ... over the top on top ... of the increase in interest expenses in the polls for the consumer sector members most of the fixed rate mortgages they don't go up when short-term rates go up but all the savings accounts to get higher interest ... that puts morning commit the consumer sector ... she has a number of other effects aam first ball of confidence in fact what we found is that when interest rates rise people feel like the Fed Reserve thinks the economy so case that the more complex ... that helps ... others Olson expectations affect ... people wanna buy a dollar to borrow money when rates achieved if the Fed Reserve begins raise rates the company that maybe the reason some are better than to get ahead ... a lot in that one in Alexandria ... also we see a positive wealth effect of the past when when when when rates rise from a low level again ... investors think the economy is doing better and so they tend to bid up stock prices ... to a positive wealth effect ... positive comp was back to positive expectations effect ... of the Goss a positive income effect ... that the negatives that people talk about his will does not make it harder for me to do for to buy a house ... thing is ... when rates this low it's an all read them Morse payment of stopping ... very hard time getting up and put together the down payment ... can have a hard time achieving the credit score ... more Spain's actually not a binding constraint right now ... days you can do to make down payments the credit score you can make a more stringent making Borsch payment of interest rates were percent I know right now ... so we think of as is to raise rates for short it from a low level it only hurt the housing market in that way but to help the commonwealth's other ways and that's when accessed in its economic stimulate the economy by removing some of your stand the fact ... that are at citizens Bank and you know it I'm in a little peep this is why is it that for twenty years the Japanese attack the zero interest rate policy has stimulated anything ... I was that that Zino and Kostin in both nineteen ninety one and in two thousand ... became ... as recessions are covers of a shallow because the Fed Reserve cut rates as asthma or covering ... amid the truth is that very low levels ... of coming interest rates to estimate the con actually raising interest rates to make seek on it says ... Ella again I don't know what I have a hard time grasping this is it's like a medicine yet he conceded to Aspen is good few maybe it is ... that the meat told the Aspen is good few that sell at this extraordinary monetary system is is actually not helping the call let's hope or knock overweight or twenty years and